In M&A, “flight to quality” refers to a phenomenon in which buyers shift their focus to companies that are perceived to be more stable, reliable, and less risky. Flight to quality occurs during times of market uncertainty or volatility. We saw a flight to quality begin after COVID-19, and we continue to see this in the market as economists predict a shallow recession ahead in 2024.
Good companies sell in any market. This shift in focus may result in an increased demand for companies with strong financials, a solid track record, and a proven management team. Companies with weaker financials or uncertain prospects may see reduced demand.
